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Connecticut Bankruptcy Law Blog

The top 5 things you should do after bankruptcy

At the Law Offices of Charles A. Maglieri in Connecticut, we help people file and successfully negotiate their way through bankruptcy. Once you begin your post-bankruptcy life, you should do several things to ensure that it will be far better than the one that led to your financial problems.

One thing you may be most eager to do is reestablish your credit. Before getting a new credit card, however, Credit.com recommends you do four other things first.

Stigma of bankruptcy exists, although unnecessarily

Our team at the Law Offices of Charles A. Maglieri understands that the prospect of filing for bankruptcy can be overwhelming and frightening for Connecticut residents. You might receive conflicting advice from numerous friends and associates. Bankruptcy should only be used as a last resort, they say, and it will ruin your credibility for life. They may also say you will be embarrassed if your employer finds out, or you may have difficulty finding a job if you are seeking employment with a personal bankruptcy on your record. It can give you a great deal of peace of mind to learn that these claims are largely outdated and untrue.

According to the Balance, a stigma against filing for bankruptcy persists, despite bankruptcy being more common these days than in years past. Many lenders understand the dilemma that people face when they are confronted with insurmountable debt and unexpected financial situations. Soon after your bankruptcy discharge, you may have options for obtaining new loans and rebuilding your credit that you did not realize were possible.

How does the Credit CARD Act benefit you?

Credit cards are a way of life in Connecticut and all other states. Your bank or credit union constantly encourages you to apply for their credit card. The stores at which you shop do likewise. Often you receive unsolicited “pre-approved” credit card applications in the mail.

While it is tempting to avail yourself of all these credit opportunities, you may wish to practice self-limitation. The problem with credit cards is that the amount of debt you accumulate tends to become the amount of credit you have. Many people who file bankruptcy do so because of their overwhelming consumer credit card debt that they now find they cannot pay.

What is the HARP refinance program?

If you are a Connecticut homeowner facing financial difficulties, you may fear that you will be unable to stay current with your mortgage payments and therefore lose your home through foreclosure. Another problem you may face is that your home has lost value since you purchased it and is now worth less than your mortgage balance. If this is your situation, you may wish to check out the Home Affordable Refinance Program, popularly known as HARP.

As explained by The Mortgage Reports, the purpose of HARP is to let you refinance your home at today’s mortgage rates that likely are lower than when you purchased your home. Originally established in 2009, HARP has since helped over 3.3 million homeowners who were “upside down” in their homes to advantageously refinance them. The average annual savings in mortgage payments is approximately 30 percent.

What are the different types of bankruptcy?

If you are a Connecticut resident who feels as though you are drowning in debt, you do have options available to you for debt relief. Bankruptcy options are designed to help you discard the debt in its entirety or to reorganize and set up payment plans in situations where your income cannot meet the demands of what you currently owe.

According to the U.S. Courts, federal courts handle all bankruptcy cases, which are referenced by their chapter in the government's bankruptcy code. The chapter you file under is based on your eligibility.

How can Ch. 13 help you keep your home?

If you are one of the many Americans who are overwhelmed with credit card bills, medical expenses and mortgage payments, you may have considered bankruptcy as an option to gain financial freedom. In fact, bankruptcy may help you manage and eliminate your debt, while enabling you to keep your home and other possessions. Under Chapter 13 bankruptcy, there are steps you can take to make your debt payments more manageable and get out from under the reign of bills and expenses. 

If you have fallen behind on your mortgage payments, Chapter 13 can help to save your home from foreclosure. The trustee appointed to your case will organize your debt and issue affordable monthly payments that will help to eventually relieve your debt. He or she may reduce interest rates, lower monthly payment amounts and consolidate your expenses to minimize payments.

Understanding Chapter 11 bankruptcy

At the Law Offices of Charles A. Maglieri in Connecticut, we know that creating and running your own business is your “American Dream.” Sadly, however, statistics show that most business start-ups fail. If yours faces overwhelming debt, you undoubtedly have numerous questions about what a small business Chapter 11 bankruptcy entails and what happens to the debts your business accumulated. Are you held liable for them?

As FindLaw explains, your company qualifies for a small business Chapter 11 bankruptcy if you have 500 or fewer employees and no more than $2.19 million in debts. The whole purpose of a Chapter 11 is to make your business profitable. Consequently, the first thing you do after filing for Chapter 11 is to renegotiate your company’s contracts and leases so as to obtain more favorable terms and/or reduce the amount of its outstanding debt.

Will Chapter 7 discharge my recent credit card debt?

If you are a Connecticut resident whose credit card and other debt has ballooned to the point where it is no longer manageable, you may be thinking about filing bankruptcy under Chapter 7 as a way to discharge these debts. While you are correct that Chapter 7 usually discharges credit card debt, that is not always the case when it comes to credit card charges you make shortly before you file bankruptcy.

A recent Bloomberg report told the story of a woman who took out an $8,000 cash advance on one of her credit cards a mere two months before she filed bankruptcy. Under Section 523(a)(2)(C)(I) of the Bankruptcy Code, there is a presumption against discharging any debt you owe to a single credit card company whose credit you obtained within 90 days preceding your bankruptcy and/or which you used to buy consumer goods totaling over $675.

Chapter 7 vs. Chapter 13: which is better for you?

If you are a Connecticut resident whose debts have gotten out of hand and you are unable to pay them, you may be considering bankruptcy as a last resort. You may or may not be aware that there are several different types of bankruptcy and that you will need to decide which type is better for you.

Most people file either a Chapter 7 or a Chapter 13 bankruptcy. Both types can help you relieve or discharge your debts, but there are differences between them as to who is eligible for each type and exactly what each type will do for you.

Beware of easy alternatives to the MHA program

Those seeking debt relief in Connecticut no longer have access to the Making Home Affordable program due to the fact that the United States Treasury is no longer accepting new applications. There are alternatives, but debtors should beware of programs that seem too good to be true.

The MHA program was a direct response to the housing crash. The US Treasury website info page on the program states that the final deadline for applications for debt assistance expired in December of 2016. While this federal incentive benefited many homeowners by providing billions of dollars of assistance in the form of mitigated losses and modified loans through the Home Affordable Modification Program, many remain in danger of losing their homes. 

Discuss Your Case With A
Respected Bankruptcy Attorney

Contact my office to discuss your debt relief needs directly with me as your lawyer. I offer a free initial consultation to all new clients where you can learn more about your legal options and what I can do to help you. I am available during regular business hours and by appointment at other times. You can reach me by phone at 860-242-0574 and 860-952-3674 or via email.

My law firm is a debt relief agency as so designated by Congress in the year 2005. I help people file for bankruptcy relief under Title 11 of the United States Code, known as the Bankruptcy Code.

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